Accounting Mistakes by Small Business Owners - Top 4 Points

Small business owners are faced by a number of challenges on a day to day basis. and it is their entrepreneurial strength that bails them through. Unfortunately, messing up on the accounting functions can lead you to the failure of a business.  So what are the top 5 accounting mistakes that small business owners tend to make?  and how can you avoid them? Find out here, 

1.       Not keeping a tab on receivables 

You need to stay on top of your receivables as it ensures a good cash flow is healthy and helps you to figure out where you stand financially each month. You can browse through software options available for freelancers to painlessly manage this part of their business. Freelancers should take help from cloud accounting tools that will allow you to send invoices and update payments from just about anywhere. Software like Fresh Books is one of the few examples, that helps send out late payment reminders and urges the clients to pay online.

2.       Not maintaining expense receipts 

Sometimes it is difficult to figure out the sudden charges slapped by banks. If you do not accurately report your expenses, you may end up paying costly penalties.

3.       Mixing personal/business finances 

When you start your own business, you should open a separate bank account where you deposit your income and from there you can pay your business account. Use a credit card will help use it for business purpose, only. Mixing your business will also make it harder to know how much money you are making so you may end up running up debt or losing track of project profit margins. 

4.       Not hiring a professional to handle taxes

Freelancers are sometimes tempted to handle taxes themselves but hiring professional benefits you in numerous ways. First, your accountant can comply with up-to-date tax laws and benefit from all the deductions you qualify for. 

Secondly, professionals such as tax consultants in Chennai or any other city can resolve discrepancies or confusions that come from guesswork ( such as incorrect tax categories, deductions) that may lead to an audit, saving the incidence of avoiding penalties.

It’s important that when you are unable to understand the nitty-gritty of a financial plan, you ask your accountant so they explain it all to you in simple language. If you continue to find this difficult to manage tricky get in touch with an accounting firm in Chennai or an accountant who is on the same wavelength and communicates in a way that works suits you best. There are now more free-lancer friendly accountants than ever was.